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Grid Iron Prep Inc. (GIPI) is a service business incorporated in January of the current year to provide personal training for athletes aspiring to play

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Grid Iron Prep Inc. (GIPI) is a service business incorporated in January of the current year to provide personal training for athletes aspiring to play college football. The following transactions occurred during the month ended January 31 a. GIPI issued stock in exchange for $100,000 cash on 1/01 b. GIPI purchased a gymnasium building and gym equipment on 1/02 for $50,000, 80% of which related to the gymnasium and 20% to the equipment. c GIPI paid $260 cash on 1/03 to have the gym equipment refurbished before it could be used d. GIPI provided $4,000 in training on 1/04 and expected collection in February e. GIPI collected $36,000 cash in training fees on 1/10, of which $34,000 related to January and $2,000 related to February. f GIPI paid $23,000 of wages and $7,000 in utilities on 1/30 g. GIPI will depreciate the gymnasium building using the straight-line method over 20 years with a residual value of $2,000 Gym equipment will be depreciated using the double-declining-balance method, with an estimated residual value of $2,250 at the end of its four-year useful life. Record depreciation on 1/31 equal to one-twelfth the yearly amount. h. GIPI received a bill on 1/31 for $350 for advertising done on 1/31. The bill has not been paid or recorded i. GIPI uses the aging method for estimating doubtful accounts and, on 1/31, will record an estimated 3 percent of its under- 30-day-old accounts as not collectible j. GIP's income tax rate is 30%. Assume depreciation for tax is the same amount as depreciation for financial reporting purposes General Ledger Account Cash Accounts Receivable Date Jan 01 Jan 01 Jan 02 3Jan 03 Debit Credit Debit Credit Balance Balance Jan 01 Jan 04 Jan 31 4,000 4,000 3,880 100,000 100,000 50,000 49,740 85,740 55,740 4 120 50,000 260 36,000 30,000 6Jan 30 Buildings Allowance for Doubtful Accounts Credit Date Credit Debit Balance Date Debit Balance 0 120 9Jan 31 2Jan 02 40,000 40,000 (120) Accumulated Depreciation-Buildings Equipment Credit Credit Balance Date Jan 01 an 31 Debit Balance Date Jan 01 Jan 02 3Jan 03 Debit 0 158 158 10,000 10,260 10,000 260 Accumulated Depreciation Equipment Accounts Payable Date Debit Debit Credit Balance Date Jan 01 8Jan 31 Credit Balance Jan 01 428 428 350 350 Deferred Revenue Common Stock Date Debit Credit Balance Date Jan 01 Jan 01 Debit Credit Balance 0 0 2,000 100,000 2,000 100,000 Service Revenue Advertising Expense Debit No Date Jan 01 4Jan 04 5 Jan 10 Credit Balance No Date Jan 01 8 Jan 31 Debit Credit Balance 0 4,000 38,000 350 4,000 34,000 350 Depreciation Expense Salaries and Wages Expense Date Jan 01 7 Jan 31 No Debit Credit Balance No Date Jan 01 6Jan 30 Debit Credit Balance 586 23,000 586 23,000 Utilities Expense Credit No Date Jan 01 6Jan 30 Debit Balance 7,000 7,000

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